the Story

A couple of years ago I attended an event called "Disruption" in Hartford that featured entrepreneurs and companies who have disrupted their industry in big ways. The panel included Ezra Klein (Vox Media), Anjali Kumar (Warby Parker), and Danny Meyer (Shake Shack). In addition to loving the idea of being a disruptor, I went to see Ezra Klein. I've long been impressed with Vox Media and the idea of someone being in the D.C. circuit and doing things in a new way was more than intriguing to me. However, when I left, I was drinking the Danny Meyer kool-aid! His description of and anecdotes about the philosophy he calls, "Enlightened Hospitality" left me feeling like I'd been to church. And anyone who knows me knows those are my favorite kind of evenings. If ever an industry has been stuck in its ways - the restaurant industry is surely it. And yet, Danny Meyer opened a super successful restaurant chain doing things in a completely different way.

He started with a higher-end restaurant in New York - Union Square Cafe - and paid his staff a living wage and outlawed tipping. Prices were raised to compensate for the increased labor cost - but the total bill remained basically the same as what it would have been if you tipped. People did not love it, but they did get used to it. And Union Square Cafe is massively successful. Eventually he opened Shake Shack - a casual dining restaurant - and also paid the staff a living wage. Shake Shack also disrupted the industry by providing high-quality food (like hormone/antibiotic free meat) at a still affordable price. And people came. And they still come today. I've rarely visited a Shake Shack restaurant where there wasn't a line out the door. The food is always great and the people who work there are happy and friendly. That's the other key to his success I think - he trains his staff in Enlightened Hospitality and if you aren't on board you don't make it as an employee.

This year, he is making waves again by going cashless at four of his restaurants (which you can read about here). He explains that going cashless increases safety, efficiency, and speed - and goes on to acknowledge socio-economic concerns about turning away people who only have cash, but reiterates that his goal is to take care of his employees. He believes that their satisfaction and safety outweigh the discomfort to a small segment of their customer base.

The main reason I fell in love with the Danny Meyer philosophy is that he was not afraid to shake things up in an industry that has run the same way for a super long time. I'm sure there were some conversations early on where he accepted that if this meant he made less money (or his company made less money), it was worth it because he wanted to run his business based on his values. But the reality is that he has made a TON of money operating this way and continues to do so.

And that's the thing about values-based earning. The runway may be longer, but if your business is sound and your product is above par, you will make more money in the long run - particularly if you take care of your employees. I've read opinions that say if you take away the money stress of the average employee - pay them enough that they aren't worried about when their next paycheck will come and give them enough time off that they can enjoy their life - they WILL focus on their job and your business. You will have greater staff retention and the staff that sticks around will be more content with their job and life.

In my opinion, we are fighting back against a capitalism that says "get the sale today" and don't worry about tomorrow. Except each tomorrow comes and you are still doing whatever it takes to get the sale that day. It is also a very top-down model where the people at the very top (owners, board, stakeholders) make the money from the business and staff is paid the minimum you can pay and be considered competitive. We saw this start to shift with relationship marketing that focuses more on building long-term brand loyalists than short-term customers and hopefully we are seeing some moves towards this philosophy in other businesses and industries. I remember Richard Branson talking once about his views on unlimited vacation and how when people know they can have off whatever time they need, they work more efficiently and take ownership over their work.

Being a disruptor is certainly not new for entrepreneurs and we all know it is part of what moves us forward. Some people believe Steve Jobs started Apple because he believed all people should be able to have a high-quality computer in their own home. What feels different to me now - and what I'm excited to be part of - is disruption that looks at how we are treating our staff and building a team. From where I sit, it feels like a much more holistic way to do business. How do you make everyone happy from the owners to the stakeholders to the customers and the staff? How do we all feel like we are supported and taken care of? And how does everyone get to make money and feel good about it?

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